The BVRLA has recently responded to the Financial Conduct Authority (FCA)’s consultation on new Consumer Credit and Coronavirus: Additional Guidance for Firms.
This guidance applies in the exceptional circumstances arising out of the Covid-19 pandemic and its impact on the financial situation of consumer credit customers.
The regulator is proposing that:
- those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total
- those who currently have an initial payment deferral, will be eligible for a further payment deferral of up to three months
- borrowers would have until 31 January 2021 to request an initial payment deferral
- a payment deferral under would not be reported as missed payments on a borrower’s credit file.
The guidance has a general section and motor finance specific provisions.
Although the consultation period was very short, the BVRLA engaged with members to give a full response.
Members had several concerns and areas they requested clarity on:
- A call for clear communication from the FCA about eligibility for the forbearance measures. They are only open to consumers, and specifically those who have either not had a payment deferral or experienced only one payment deferral and not resumed full repayments.
- Clarity on how the FCA will respond if the current national restrictions are extended or reintroduced in 2021.
- Concerns around non-bank lender liquidity and how these measures could make it even harder for them to access the finance they need for their businesses. More support is needed for these firms.
- Greater clarity in the actual guidance around the lack of eligibility of those who have resumed full payment after an initial payment holiday.
- Clearer wording around the section on repossessions in the general guidance. The wording as it stands now is too open to misinterpretation and does not mention voluntary terminations.